VARs Concerned Carrier Moves Could Cut Into VoIP Sales

As carriers complain about regulatory taxation eating away at their profits, VARs have begun bracing for an assault by the carriers on their VoIP businesses.

"Next year we may see [VoIP sales] go down, because the carriers like Sprint and the others are reducing rates to compete with VoIP," said David Tews, vice president of Indigo Wireless, a diversified service provider in Mansfield, Pa., attending last week's CTIA Wireless 2005 show in New Orleans.

VoIP sales account for 60 percent of Indigo's business, a fivefold increase in just one year, Tews said. But such growth may not be sustainable, he said, as carriers look to relieve their tax burdens with metered billing of VoIP services, and more attractive wireless and voice services.

"We've become the tax agency for many states," said Stan Sigman, president and CEO of Cingular Wireless, Atlanta, during a panel discussion at CTIA. "In some states, 18 percent of our revenue is taxed."

Len Lauer, president and COO of Sprint, Overland Park, Kansas, agreed: "We have a big bull's-eye on us because of our huge revenue. We are easy to tax, and it hurts us as an industry."

Adding additional metering to VoIP services, which are essentially free to many consumer customers, may be a tactic used by the carriers to offset losses from taxation and other regulatory issues, said Claude Richard, sales agent with Bridgewater Systems, a Roanoke, Va., IP monitoring vendor. And though the capital expenditure of deploying networkwide metering could be considerable, "the big carriers won't just stand by and let some service happen for free," he said.

Greg Praske, CEO of Association Resource Group, a telecom VAR in McLean, Va., added, "Whether you are paying for minutes, paying for bandwidth, or paying for an application, you are going to be paying for something."

Tweet

   

More Networking